He told CNBC-TV18 that IT has been doing well and sectors like auto ancillaries and textile will pick up next.
Also read: Market pullback real, Nifty can touch 5850: Dalton Capital
Below is the verbatim transcript of his interview to CNBC-TV18
Q: What is the sense? You would think that 5500 is a base we have put in and you would be okay with taking long positions at that level?
A: For the very near-term possibly yes. The market has taken support there couple of times so we could argue that it is a near term support. I don't think if one takes a slightly longer view one would reach the same conclusion because whatever state the market earlier was, it is still pretty much there in the background.
One will see the taper beginning to start fairly soon. I would like to see the market reaction after that, which has actually started just on the basis of the news that it is likely to start.
Q: Sectorally how would you play the markets now?
A: I think it is reasonably clear now that finally the sectors that were doing really well have started to ease of. People are now looking at sectors which are affording more value.
We have seen IT begin to do well. The other export areas are also beginning to do little better. I would expect sectors like auto ancillaries and textile to pick up next. I think that will be a play which will continue for the next six months. It won't be surprising to see the power sector especially the utilities to also start showing some traction including some of the input providers to those utilities.
Q: With respect to your skepticism about the bottom you said only in the near-term you would respect 5500 how much more would you give in terms of lows, yes we have perhaps 5 percent gross domestic product (GDP) growth, that is not priced in at 5500?
A: The index does not show as much as it should. Break up the sector in two parts. Fast moving consumer goods (FMCG) and pharma and to some extent banks though they have corrected quite substantially, now which are probably trading at fairly expensive valuations and that is true for FMCG. There are whole out of sectors which are trading perhaps many of them at 2008 or below that level.
From an index point of view, something major has to move it up. I don't see too many stocks in the index which are looking very cheap on the basis of their performance or expected performance.
On the other hand, I do find there are large numbers of companies which are fairly well run and are cyclically down swing, because of the current growth environment we are in. If one has to be investing and taking a view that at some day the growth environment will become better then one would be interested in those companies because that's where one is going to get the best bang for the buck.
Therefore, logically the investment has to be outside the index. That can't move the index up, so the market maybe more interested in where the index is unlikely to be.
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